The basics of economic reason

Published 3:03 pm Saturday, July 23, 2011

No nation, business or individual can escape the pain of spending more than it makes. This is basic economic reason. If you spend more than you make, you go into debt. If you cannot pay your debts, you risk default. When you default, there are painful consequences.

This is the first lesson we learn when creating a budget — you cannot pay out more than you take in. This is the principle that we teach our children when it comes to finances. This is the principle used by every successful business.

What Americans do not understand is why the federal government believes this principle of economic reason applies to everyone but the federal government.

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The federal government is in the middle of a spending crisis. This year, the federal government will spend twice what it spent just 10 years ago, and more than 40 percent of it is borrowed money. In the past two and a half years alone, the government accumulated the same amount of debt that it took the United States 216 years to accumulate.

The federal government reached its current debt limit of $14.3 trillion on May 16 of this year. Treasury Secretary Timothy Geithner has indicated that he can keep the country out of default until Aug. 2, at which point he will need to begin prioritizing payments to be made on the United States’ outstanding financial obligations.

Today, we are feeling the pain of past decisions. The national debt has become a cancer on our economy, choking job growth, threatening our national security and hampering our global competitiveness.

Attacking this cancer at its roots means cutting spending. If we do not, the United States will face a future that we do not recognize, and our children and grandchildren will shoulder the crushing burden of our debt.

Though the government has already wasted valuable time in confronting this fiscal crisis, it is still not too late to change course. Washington can no longer push the crisis under the rug. Changes and choices must be made.

No longer can we afford to just borrow more, print more, or procrastinate with a “we’ll do it later” mentality. We cannot afford more procedural or accounting gimmicks that hold false promises about what Congress will do now or in the future to control spending.

It is time. Leaders in Washington must have the resolve to stand up and say the principles of economic reason apply to government, just as much as they apply to everyone else.

This week, the House of Representatives took an important step in that direction. The House passed, with my support, the Cut, Cap, and Balance Act. The legislation makes cuts and reforms to get our debt under control. It cuts $111 billion in FY2012 and it locks in those savings with enforceable caps on spending.

Because near-term spending cuts will not be enough without long-term changes, the bill also forces Washington to live within its means through a Balanced Budget Amendment. Americans have seen how difficult it is for the Congress to withstand the pressures for more spending. The only way to guarantee responsible spending in the future is if the Constitution requires it.

While no plan is perfect, the Cut, Cap, and Balance Act protects our seniors and veterans, ensures the debt limit is not raised without a credible plan for addressing our debt problem, and preserves our ability to protect and defend our nation.

It is the plan that has been put forward for a vote. It is a plan that follows the basic economic principle that says we cannot spend more than we have.

And most of all, the Cut, Cap and Balance Act is a much-needed plan that will return the United States to the path of economic prosperity and freedom for which our Founding Fathers knew we were destined.